NZ Super Fund 2017/18 Annual Select Committee Review

Posted On: Wednesday, 20 February 2019

Appearing before Parliament’s Finance and Expenditure Select Committee today for the 2017/18 Annual Review of the Guardians of New Zealand Superannuation, Chair Catherine Savage provided an update on the performance of the NZ Super Fund.

Ms Savage said recent volatility in equity markets provided opportunities for investors such as the NZ Super Fund. “With no substantial withdrawals from the Fund forecast until the 2050s, we can take a long term view and look to profit from the ups and downs along the way.”

Equity markets rebounded strongly in January after a significant decline in the last quarter of the 2018 calendar year. At the end of January 2019, the Fund stood at $40 billion.

“We encourage stakeholders to look through short-term shifts in value and focus instead on more appropriate and long-term metrics of success.”

Since inception in 2003, the Fund has returned 9.96% p.a. (as at 31 January 2019, after costs, before NZ tax). The Fund is also ahead of its Treasury Bill and passive Reference Portfolio benchmarks, which have returned 3.96% p.a. and 8.44% p.a. respectively over the same period.

Ms Savage said the Guardians’ 2017/18 year was notable for the appointment of Matt Whineray as Chief Executive Officer, following the departure of long-standing CEO Adrian Orr to the Reserve of Bank of New Zealand. The Government has also appointed three new members to the Guardians’ Board, Simon Botherway, Catherine Drayton and Henk Berkman. A new Chief Investment Officer, Stephen Gilmore, will commence at the Guardians in late February.

In his first appearance at the Committee as CEO, Mr Whineray said it was a privilege to lead the Guardians and Fund, which in 2018 was named the Asian Investor Sovereign Wealth Fund of the Year.

Notable transactions over the year included new investments in Fidelity Life, fresh fruit and vegetable grower and marketer NZ Gourmet and US-based waste and recycling technology company Rubicon Global. The Fund also diversified its rural landholdings with investments in a New Zealand vineyard and leading Australian beef stud Palgrove. Existing investment manager Apollo Global Management was appointed to a third Fund mandate and, subsequent to the end of the financial year, a new manager, Neuberger Berman, was appointed.

The Guardians also made progress towards meeting the Fund’s carbon reduction targets for 2020, with a low-carbon approach now applied to emerging market equities as well as to passive global and New Zealand equity holdings.

Together with Canadian institutional investor CDPQ Infra, in May last year the Guardians expressed an interest in funding, designing, building, owning and operating a light rail system for Auckland, on a commercial basis. Mr Whineray said the Guardians and CDPQ Infra remained very interested in partnering with the Government on the project.